HOUSTON Texas imposed statewide rolling blackouts for only the second time in over two decades on Wednesday after frigid weather shut down dozens of generators, and warned that it may be forced to do the same on Thursday.
The grid operator declared an energy emergency after unusually frigid weather shut down 7,000 megawatts of power generators, about 8 percent of the installed capacity in the second-most populous state. Spot power prices surged 60-fold at one point, and Mexico exported electricity.
The Electric Reliability Council of Texas (ERCOT) rescinded its call for rolling blackouts at about 2 p.m. local time, but warned of a "strong possibility" it will reinstate them later Wednesday or Thursday unless more power plants return to help meet forecasts for even stronger heating demand as temperatures in some cities dip below freezing through Friday.
While the disruptions had little impact on major oil and gas operations in the heart of the U.S. energy industry, they left nearly 1 million homes dark and without heat for up to an hour, caused some schools and businesses to shut and spurred traffic snarls as some traffic lights stopped working.
"Rolling blackouts in Houston ... You would have never thought you would see the day in the energy capital of the world," Jack Moore, chief executive of oilfield services equipment maker Cameron said on a conference call conducted from a division office because its Houston headquarters had no power.
Transmission utilities including American Electric Power Co and CenterPoint Energy imposed the blackouts, which are rare in Texas. Similar measures were last taken in April 2006 when soaring heat caused demand for air conditioning to surge.
The National Weather Service issued a winter storm watch for southeast Texas for Thursday and Friday, with frozen rain and sleet in the forecast.
MOST REFINERIES SPARED
Early Wednesday, ERCOT called on state energy suppliers to cut about 4,000 megawatts worth of power demand in the early hours of the day -- equal to 800,000 homes, using ERCOT's estimate of 1 megawatt per 200 houses in extreme temperatures.
The cold snap did not impact the state's giant fleet of oil refineries, which comprises about 13 percent of U.S. refining capacity, but it did spur the shut-down of a pipeline and cause some Texas natural gas production wells to shut.
Shell Oil Co said severe winter weather triggered a malfunction in fuel production units at its 329,800 barrel-per-day (bpd) joint-venture refinery in Deer Park, Texas.
Freezing weather shut at least 600 million cubic feet per day of natural gas production in three Texas basins, according to data from Bentek Energy.
Explorer Pipeline, which carries crude oil and distillates from Texas to Tulsa, Oklahoma, shut due to cold weather.
"Houston faces rolling blackouts, which should be disruptive to residential users. This is not likely to have any major effect on the oil industry," Mark Routt, oil engineer and consultant at KBC in Houston told Reuters.
Refineries and other critical infrastructure have separate power supply agreements with utilities and are less susceptible to interruptions than residential or commercial customers.
MEXICO TO THE RESCUE
Mexico's Federal Electricity Commission said it was supplying Texas with about 280 MW of power from noon to 10 p.m. Wednesday via interconnections along the border.
In Houston, the state's most populous city, power supplier CenterPoint Energy started 45-minute "controlled rolling outages" at about 5:45 a.m. local time, affecting about 330,000 customers on a rotating basis.
"These controlled rolling outages are planned emergency measures designed to avoid potentially longer, and more widespread power outages," CenterPoint official Scott Prochazka said in a statement.
Texas supplier Luminant, a subsidiary of Energy Future Holdings Corp, said an undisclosed amount of its 15,400-megawatt Texas generation fleet shut overnight, and is acting to quickly restore units.
Weather-related unit outages caused hourly wholesale power prices in Texas to soar 60-fold to $3,000 per megawatt-hour, up from about $50 where they usually trade. That's comparable to about $3 per kilowatt-hour for residential users, though most Texas home-owners have long-term power deals with suppliers that protect them from short-term price spikes.
Wholesale power for Thursday delivery traded as high as $500, up from about $70 for Wednesday, as cold weather was expected to persist until Friday.
ERCOT forecast peak demand would top 55,000 megawatts on Wednesday and 57,000 MW on Thursday before dropping to about 47,000 MW on Friday.
That is still well below the grid's 2010 summer peak of 65,715 megawatts.
ERCOT serves about 22 million customers in the Lone Star State, representing 85 percent of its electric load and 75 percent of its land.
(Additional reporting by Scott DiSavino, Joe Silha and Josh Schneyer in New York, Braden Reddall in San Francisco and Robert Campbell in Mexico City; Editing by Lisa Shumaker and Sofina Mirza-Reid)